What is a UCC filing & how does it affect your business credit?

UCC filings aren’t inherently bad — they are a normal part of business financing. Let's explore what a UCC filing is, what it means, and how it may impact your business credit here.

UCC filings explained

A UCC filing is a legal notice a lender files with the Secretary of State when it has a security interest against your business property or assets. The filing gives public notice that the lender has a lien against the business assets. UCC filings perfect a creditor’s security, and as part of the public record, they often appear on business credit reports.

While UCC filings are normal to find on a business credit report, they can sometimes make it more difficult for small business owners to get certain small business loans.

UCC filings typically do not affect business credit scores, but they may be flagged in reports as cautionary items that lenders may review more closely. 

Experian describes cautionary UCC filings this way:

“The presence of cautionary UCC filings indicates that the business has pledged key assets such as accounts, accounts receivable, contracts, hereafter-acquired inventory, leases, notes receivable or proceeds to secure financing. Use of these critical assets may indicate that the business is under financial stress.”

Understanding how UCC liens work helps you manage your business's public financial record and protect your ability to borrow when you need to.

UCC filings are governed by Article 9 of the Uniform Commercial Code, a standardized set of commercial laws adopted by all 50 states. This legal framework creates a predictable system for secured lending across state lines.

The UCC filing system operates on three core principles:

• Attachment: A security interest becomes legally enforceable between you and the lender once you sign the security agreement and the lender provides value (loan funds or financed equipment, for example)
• Perfection: Filing a UCC-1 financing statement with the state puts the public on notice that certain assets of the business are pledged as collateral. These may include specific property, like equipment, or less tangible assets, like accounts receivable. This protects the lender's rights against other creditors.
• Priority: The "first-to-file-or-perfect" rule means the first lender to file gets paid first if multiple creditors have claims on the same collateral

Why lenders file UCC-1 statements

Don’t be alarmed if a lender files a UCC statement when you get financing. They are very common, and lenders file them for several important business reasons, mainly to:

• Secure collateral: A UCC lien turns an unsecured promise to pay into a secured debt backed by specific business assets
• Establish lien priority: The filing date determines which creditor gets paid first in case of default or bankruptcy
• Enable asset recovery: Article 9 typically gives the lender the right to take the collateral in the event of default

For lenders, filing a UCC-1 is standard practice for certain types of loans, and not a judgment of your businesses’ creditworthiness. It's simply how secured lending works.

Types of UCC filings

Understanding the different forms can help you track what's happening with your business credit profile:

UCC-1 financing statement

This is the original filing that creates the public record of a security interest. Lenders typically file this within days of closing your loan since it’s important to be the first to file. The UCC-1 contains your business's exact legal name, the lender's information, and a description of the collateral.

UCC-3 amendment / termination

This form modifies or ends the original filing. Common uses include:

• Termination: Officially releases the lien when you pay off the loan
• Continuation: Extends the filing for another five years before it expires
• Assignment: Transfers the rights to another entity, e.g., a debt is sold
• Amendment: Updates information like collateral description or party details

The lender normally pays the filing fees when you get a loan, though it’s certainly possible they can pass them on to borrowers directly or through an origination fee. 

How a UCC filing works in business lending

The typical UCC filing timeline follows this pattern:

Loan origination: You sign loan documents including a security agreement that grants the lender rights to specific collateral.

UCC-1 filing: Within days of closing, the lender files a financing statement with your state's Secretary of State office to perfect their security interest.

Active period: The filing remains effective for up to five years while the borrower makes payment on the debt. It will often appear on business credit reports during this time.

Loan payoff: When you repay the loan in full, the lender should file a UCC-3 termination statement to release the lien.

Record cleanup: You should verify the termination appears in state records and on your credit reports. It is not unusual for lenders to fail to file termination statements. A creditor may incorrectly understand the businesses’ financial situation if these filings aren’t updated. 

This entire process creates a public paper trail that other lenders can search before extending credit to your business.

How to search for UCC filings on your business

Monitoring UCC liens for your business helps you spot problems and ensure terminated liens are properly removed. 

The easiest way to do this is often to check your business credit reports. Not all of them list UCC filings, but if you’re checking with multiple business credit bureaus you should see them.

Nav Prime helps you check your business credit with all three major business credit bureaus. In addition to checking for UCC filings, you can understand what information your business credit reports contain. 

You’ll also be able to monitor your credit reports for new information such as new UCC filings. 

Search state records

If you want to search UCC filings directly, here’s how to do that: 

1. Navigate to your state's Secretary of State website: Most states offer free online UCC search portals
2. Find the UCC search section: Look for "UCC," "Business Services," or "Commercial Recordings"
3. Enter your exact legal business name: Search using the legal name of the business as registered with the state — not a trade name or DBA
4. Review the results: The system should display matching filings with filing dates, lender names, and current status
5. Download filing details: Most portals let you view or download copies of the actual UCC forms

Private search services

For situations requiring absolute certainty, companies like Wolters Kluwer and CSC offer more sophisticated search technology that can find variations and misspellings state searches might miss. These services typically cost $25–$100 but provide more thorough results.

NACHA payments

Note that many state filing offices accept electronic payments through NACHA (the ACH network) for search reports and filing fees, making the process faster and more convenient.

Impact of UCC filings on business credit & funding

UCC filings may affect your business in several ways:

Appears on credit reports: Active filings show up on reports from Dun & Bradstreet (D&B), Experian, and Equifax, making that information available to lenders or other companies that purchase your credit reports. Not all lenders report to all business credit bureaus, so information may vary between reports.

Reduces available collateral: Assets already pledged as collateral generally can't be used to secure additional loans from other lenders. (An exception is with a blanket lien. More on that in a moment.)

May limit lending options: Some lenders avoid businesses with multiple open UCC filings, viewing them as higher risk.

Affects advance rates: Lenders may offer lower advance rates on business cash advances, or require higher down payments, when there are existing liens.

Blanket lien vs. specific collateral

The scope of the UCC filing makes a big difference. A specific collateral lien covers only specific assets (like "one 2024 Ford delivery truck"), while a blanket lien typically covers "all assets of the debtor, now owned or hereafter acquired". 

Blanket liens can make it harder to get additional financing since all your assets are already pledged to a particular creditor. However, a Purchase Money Security Interest (PMSI) can give a special "super-priority" to a lender to finance the acquisition of specific equipment or goods. If a lender has a blanket lien, a PMSI may allow a new lender to finance a specific asset. 

These situations can be complex—consult a legal or financial advisor if you’re unsure how a blanket lien or PMSI may affect you.

How to remove or terminate a UCC filing

Getting UCC liens terminated and eventually removed from the public record may take several steps. These may include: 

1. Pay off the underlying debt: A loan or financing must be fully satisfied before any termination can occur
2. Request UCC-3 termination from lender: Contact your lender immediately after final payment and formally request they file a termination statement
3. Use your legal right to demand termination: If the lender doesn't act promptly (usually within 20 days of your written request), you can file the termination yourself under UCC Section 9-513. Check with your Secretary of State for information on how to file this request. 
4. Confirm removal with the Secretary of State: Search the state database to verify the filing status shows "terminated"
5. Monitor your credit reports: Check that the terminated lien no longer appears as active on your business credit reports. (It may still appear, but it should not appear open or active once it’s been terminated.)

Keep copies of all termination paperwork as proof if it comes up in future searches. 

Frequently asked questions